Tuesday, July 24, 2007

FDI in Poland

From Poland:

Poland ranked No. 7 among top worldwide FDI investment draws
– Ernst&Young
16:05 03.07.2007
wtorek

Poland is now the world's seventh most attractive destination for foreign direct investment (FDI) – although the country is losing ground to attractive economies in Asia, according to a report by Ernst & Young and the Polish Information and Foreign Investment Agency (PAIiIZ), presented Tuesday.

"This is another year where we are one of the world's top 10 most attractive countries," said Agnieszka Talasiewicz, Ernst&Young partner for tax law, during a Tuesday press conference.

Poland was ranked No. 5 in 2006. The released report compiles information included in the annual Ernst & Young European Attractiveness Survey for 2007 with hard figures for 2006 provided by PAIiIZ.


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Ernst&Young based the study on the opinions of 809 international "decision makers," mostly from Europe, but also from the United States and Asian countries. FDI figures came from the company's database, which includes the results of monitoring of foreign direct investment projects.

Within Europe, which is seen as the world's most attractive region for investment, some 18% of respondents said Poland was the most likely destination for future operations. The country maintained its No. 2 spot in terms investment attractiveness in Europe, behind neighboring Germany with 20% of votes cast and ahead of the Czech Republic, whose popularity is growing, with 13% support.

The report shows, however, that European markets are beginning to lose out to more attractive economies in Asia.

Other factors may also undermine Poland's position in the future, the report reads. Among the top 15 European states for FDIs projects in 2006, Poland occupied the sixth place with 152 investments, compared with Britain, which held the top spot with 686 projects. In terms of the number of projects, Poland's result last year dropped 16%, and it also declined when compared to 2005 when it had 180 foreign direct investment projects.

Once known for low labor costs, Poland has also seen a steep increase of salaries of more than 8% since the beginning of the year. Moreover, companies are struggling with shortages in skilled labor force, as the unemployment rate continued on a downward path to 13% in May from more than 20% in January 2004.

FDI projects also contributed to the decline of unemployment Poland. In 2006, Poland maintained its lead in Europe as the number one destination for job creation through FDIs, with 31,115 newly created jobs from 37,745 positions the prior year.

"While Central and Eastern Europe attracted only 26% of investment projects [in Europe], they benefited from 51% of the new jobs created by foreign investors," the report reads. "This represented an average of 217 jobs per project, compared with 64 jobs per project in Western Europe. Poland was the largest creator of FDI jobs, with almost 15% of the total."

The FDI workplace figures for Poland resulted from a high number of labor-intensive industrial investments, which accounted for 65% of all FDI projects in 2006. Robust development of the manufacturing sector contradicts, however, the country's plans to switch on the highly advanced technology investments and research and development (R&D) centers, the report said.

"High-technology projects are a priority for us and this direction is unlikely to changes for years ahead," said Pawel Wojciechowski, Chief Executive Officer for PAIiIZ. "So far, Western Europe has attracted much more technologically advanced projects, and we're making our first steps in this area. This is the main challenge ahead."

Ernst&Young's Talasiewicz said Monday that to maintain its strong position, Poland should not only put more efforts into creating and promoting an attractive image of its economy abroad, but also improve the legal environment to make it more transparent, reduce bureaucratic procedures and develop its transport infrastructure, which 54% of respondents pointed as the factor playing the most important role for making decisions about investment destination.

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